Why Politicians Need To Get Real About Digital Innovation

14/11/2016 16:12

Risto Sarvas
Business Director at digital innovation consultancy Futurice and lecturer at Aalto University in Finland.

The UK employment tribunal's ruling that Uber's UK drivers can't be classified as 'self-employed' has important implications for the techno-optimistic politics of innovation says Futurice business director Professor Risto Sarvas.

Yes the world is changing fast. It's obvious that digital innovation operates on a more accelerated timetable than the time it takes to change laws and regulations. But is that a good enough reason to place technologists and innovators in the driving seat? What kind of a society will they create? What kind of politics will 'disruptive innovations' introduce?

There are still a few appeal courts before a final decision is reached. Regardless of the eventual outcome, this early ruling is a step change for the politics of innovation.

First, the decision highlight the business model of the gig economy where workers are treated as self-employed entrepreneurs, rather than employees, with brands such as Uber taking commission on their earnings. Just as a big corporation hires consultants, or a homeowner calls a plumber to fix the pipes, in the gig economy there is no employment contract because after all, it's only a gig.

In the UK, Uber has around 40,000 drivers, so to date this approach will arguably have saved Uber employment costs (holiday pay and the living wage) 40,000 times over. Replicate this across the 66 countries in which Uber operates and you gain some insight into the business model behind a company valued at $66 billion.

This sky-high valuation partly explains why Uber takes centre stage in the politics of innovation: it's the poster boy for digital disruption. If digital innovation hype is to believed, Uber isn't just an elegant service or a great user experience, it's a perfect example of how outdated business models could and should be overturned by smart digital services.

Is this a real concern? Is the hype around Uber and digital innovation impacting politics and policies?

Yes, politicians calling out the working practices of gig economy brands like Uber risk being called digital dinosaurs. But the bigger risk by far, is that by falling for the hype around digital innovation and failing to regulate new platforms and services adequately, they unwittingly usher in a return to good, old-fashioned worker exploitation.